Another round of duty hike; these communication items set to get costlier as Modi curbs imports

The move comes after a finance ministry official said on Thursday that the government is considering more steps to check widening CAD and is also hoping that rupee would stabilise.

After raising import duties on 19 ‘non-essential’ items last month, the Narendra Modi government on Thursday hiked import duty on select communications items in order to check mounting current account deficit and rapid fall in rupee by curbing imports. The latest round of import duty hike includes PCB (printed circuit board) assemblies used in telephone sets and base stations, which could make it expensive for the telecommunication service providers.

The increase in duties on the selected items will be effective from October 12, Central Board of Excise and Customs (CBIC) said in a notification. The import duty has been hiked to 10% on populated, loaded or stuffed printed circuit boards of all goods (other than mobile phones), base station and optical transport equipment.

While, the import duty has been hiked to 20% from 10% on base stations and machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus other than modems, digital loop carrier systems, voice frequency telegraphy and multiplexers.

The move comes after a finance ministry official said on Thursday that the government is considering more steps to check widening CAD and is also hoping that rupee would stabilise. Official sources told the Financial Express newspaper that the Prime Minister’s Office (PMO) is planning to hold a meeting to cut merchandise imports from overseas, as the government is moving ahead for a second round of curbs, including higher tariffs, on “non-essential imports”. This is part of the government’s efforts to cut the current account deficit as well as to contain its negative impact on the rupee, the official further added.

For the first quarter in the current financial year 2019, the current account deficit widened to 2.4% of the GDP. Meanwhile, the rupee has also touched its life-time low and has depreciated more than 13% since the beginning of 2018.

On September 26, the government doubled the import duties on 19 products: household refrigerators, air conditioners, washing machines (less than 10kg), compressors for air conditioners and refrigerators, speakers, footwear, radial car tyres, various gems and jewellery products, plastic goods, luggage carriers like suitcases etc, and ATF, to 20%. However, no import duties were imposed on gold and steel. The change in import duties become from September 27.